The Future Marriage of Virtual Currency and Mobile Payments in Canada

Virtual currency and mobile payments could make a perfect combination in Canada, which could also lead to wider virtual currency adoption elsewhere.

Canada isn’t just ahead of the U.S. in its advancements in mobile payments, it’s also laying the groundwork for the widespread adoption of virtual currencies as well. While cases involving Bitcoin and its regulation are still working their way through the U.S. courts, the Royal Canadian Mint is already developing its own virtual currency called MintChip.

Although there hasn’t been a great deal of press about the Mint’s efforts, it has held a developer contest for building apps for using the MintChip, and is planning to pilot it some time later this year.

Several companies that I’ve met with along the Canadian mobile payments tour that I’m participating in this week have mentioned Canadians’ dislike for their real currency. Canadian currency has more coins than American currency, and nobody likes carrying around a ton of change. Over the last few years the average value of debit transactions has been falling as debit replaces cash for smaller transactions that would typically involve those coins. So it isn’t inconceivable that an alternative digital currency could take hold in Canada in those smaller transactions.

One of the companies that presented on the tour today, DonRiver, which provides a digital wallet for banks and telcos, said it is already looking into the combination of mobile payments and virtual currencies. For instance, the company can build Bitcoin acceptance into its mobile point of sale solution with an app that can scan a barcode generated on a consumer’s phone, and then charge that consumer’s Bitcoin account, Brent Ho-Young, DonRiver’s managing director of its mobile and financial services practice, said.

With MintChip, the company can use the digital currency’s API’s and integrate them into its own mobile platform to enable virtual currency payments through its mobile wallet, Ho-Young added. DonRiver could also enable mobile remittances with virtual currency since its mobile platform is integrated with Western Union’s IT infrastructure for mobile money transfers.

In anticipation of wider virtual currency adoption in Canada and elsewhere, DonRiver has developed its own virtual currency for its mobile financial services platform, which can hook into other digital currency platforms and exchanges, enabling these type of uses for virtual currency in mobile commerce, Ho-Young explained.

And just as the Royal Canadian Mint can export currency overseas, it can also provide its digital currency technology to other counties, Ho-Young pointed out. If mobile can provide relevant and convenient use cases for virtual currency in consumers’ everyday lives -- like the examples above of virtual currency payments and transfers -- then it could provide a path for greater adoption of those currencies. And if that model is successful in Canada and the Royal Mint decides to export its MintChip technology, then maybe virtual currency could gain popularity in other countries as well.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

re: The Future Marriage of Virtual Currency and Mobile Payments in Canada

Doesn't the fact that MintChip is controlled by a national government go against the whole basic reason that virtual currencies (at least Bitcoin) were created in the first place (i.e., creating a currency that is not subject to the manipulations of a government)?

re: The Future Marriage of Virtual Currency and Mobile Payments in Canada

Wow, Canada seems quite advanced when it comes to inventing virtual currency and marrying that with mobile payments. Bitcoin has been in the news lately because SecondMarket, an exchange that traded the private shares of companies like Twitter, plans to raise money to start a Bitcoin fund for wealthy investors. Bitcoin has been controversial since it was created outside the banking system. This makes the Royal Mint's development of MintChip more legitimate since it's being developed within a national body that mints currency. Is the Federal Reserve doing anything to create a virtual currency?